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Audi: No plans to change U.S. product lineup

Johan de Nysschen Photo credit: JOE WILSSENS
DETROIT -- Audi is well-positioned to weather the recent run-up in fuel prices and continues to evaluate a U.S. assembly plant to build on its presence in the country, its top American executive says.

Johan de Nysschen, executive vice president of Audi North America, in an interview Monday, June 2, with Automotive News, said the automaker doesn’t expect to change plans for its product mix -- even though gasoline and diesel prices have doubled in the past few years.

That’s because the luxury sector hasn’t seen the same dramatic shift in buying behavior that has dogged the overall market, he said.

“If the current fuel price environment continues to stay this way -- and all indications are that even if it improves, it won’t improve by much -- we could begin to see shifts in buying behaviors in the U.S.,” de Nysschen told a group of editors and reporters in Detroit.

Audi’s compact A3 is the cheapest model in its lineup. De Nysschen said the segment for the A3 and other small luxury cars is in its infancy and could gain momentum as customers opt for more fuel efficiency.

The luxury SUV sector is where Audi has seen the biggest impact from higher fuel prices. The Q5, a compact luxury SUV that enters the market next year, should fill a growing demand for the smaller SUV segment, de Nysschen said.

After rolling out the Q5, de Nysschen said, the company will have filled the only remaining niche that isn’t addressed by its current product line. From there, he said, Audi might add another high-performance sports car to its line in the next few years.

U.S. manufacturing

Audi and its parent, Volkswagen AG, have expressed interest in at least one U.S. manufacturing plant to combat the weaker U.S. dollar.

“The ultimate question has to be at what stage does it make economic sense to invest in local manufacturing, because that ultimately has to be the answer,” de Nysschen said.

But despite increasing sales more than 20 percent in the past three years, Audi still doesn’t sell enough cars in this country to persuade its European suppliers to follow the automaker to the United States.

“As we grow our business, I think we get closer and closer to the point where it may become financially viable to look at local manufacturing, but we aren’t there yet,” de Nysschen said.

It hasn’t been decided whether Volkswagen’s plans for a U.S. assembly plant will include Audi vehicle production, de Nysschen said.

VW group CEO Martin Winterkorn said last month that the carmaker would decide in mid-July whether it will set up a U.S. assembly plant.

Standing behind diesel

Despite diesel fuel prices nearing $5 per gallon, Audi will stand behind its TDI diesel technology and enter the United States with it in the Q7 SUV next year.

De Nysschen said Audi remains optimistic about the use of diesel in North America because the engines get about 30 percent better fuel economy than gasoline engines. According to Audi’s figures, diesel could be as much as 74 cents a gallon more expensive than gasoline and the customer would still break even.

Scott Keogh, Audi’s chief marketing officer for America, said fuel efficiency is a strength for Audi that consumers can expect to see highlighted by the upcoming ad campaign for the A4.

“We think the market is actually swinging into our sweet spot,” Keogh said. “We have a strong four-cylinder, we have lightweight use of aluminum and we have fuel efficiency.

“I think you’re going to see this with the launch of A4 (small sedan) in September. We have a really strong message on fuel efficiency.”

That message will be unique to the A4 at first and then will expand to other products, Keogh said.

Said de Nysschen: “If fuel prices remain at this level, I have absolutely no doubt that consumers will require more fuel-efficient vehicles, and that they will become lighter and quite conceivably begin to be a little bit less big.”

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